Chapter 3: An overview of indigenisation and economic empowerment
3.2 Indigenisation and economic empowerment defined
Indigenisation and economic empowerment may be defined as an affirmative action policy that is intended to address societal disparities that may have been created by years of oppression, marginalisation and discrimination.
During interviews with Government of Zimbabwe and quasi-governmental institutions, the following definitions arose.
“It is a policy that seeks to redress the past economic imbalances caused by racial discrimination. So, it seeks to bring the previously disadvantaged, (who are the indigenous Zimbabweans) into the mainstream of the economy” (Government Official 1).
“Indigenisation focuses on ensuring that the previously disadvantaged Zimbabweans have access, ownership and control of the means and factors of production. Making deliberate effort to ensure that they actually become players in the mainstream economy” (Government Official 2).
Indigenisation and economic empowerment is a deliberate affirmative action programme designed to provide indigenous citizens the opportunity to effectively participate in the economic activities of a country. Its transformative argument is underpinned by the historic injustices that have led to the disenfranchisement and marginalisation of indigenous citizens by previous leaders. To comprehend this measure, it is important to interrogate affirmative action as a key term and to build a solid foundation for interpreting actions taken by countries such as Zimbabwe.
3.2.1 Definition of affirmative action
Affirmative action, according to Lee (2014:162), is described as "preferential measures to redress systemic disadvantages faced by a population group that is under-represented in socially esteemed and economically influential positions". Affirmative action, according to Anderson (2010:135), is any policy that attempts to grow the involvement of a disadvantaged socio-economic group in a given environment. Affirmative action may be described as policy that is drawn up in order to increase the opportunities provided to a section of society that was previously disadvantaged or underrepresented.
Many suggest that affirmative action was first introduced onto the political landscape by United States President, John F Kennedy in 1961 to promote social equality in that country. However historical records indicate that measures to sanction affirmative action had been used years before.
For example, President Franklin D. Roosevelt signed a law in 1941 that prohibited the discrimination on race, colour, creed and national origin in the defence industry at a time that the United States was preparing for World War 2. Nevertheless, there is widespread agreement that the term affirmative action had never been used until the 1960s but that changed on the 6th of March 1961 when President Kennedy issued Executive Order 10925, which featured a stipulation that
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“government contractors take affirmative action to ensure that applicants are employed, and employees are treated during employment, without regard to their race, creed, colour, or national origin” (MacLaury, 2010:42).
Affirmative action may be applied to different social and economic conditions, from access to education and admission to universities; gender-based employment appointments; preferential treatment for businesses owned by previously disadvantaged members to proportional representation in parliament. Dietrich (2013:2) explains that there are differences in the various strategies applied by the countries adopting affirmative action due to their respective backgrounds and existing situations. However, there are striking similarities in the societal background that has led to the creation of these policies.
These policies are intended to remedy previous socio-economic imbalances by presenting opportunities for groups that were previously disadvantaged or underrepresented as a population group. These groups may have experienced past and present discrimination as well as limited access to resources and may include collectives of a certain race, ethnicity, region, gender, disability, or religious affiliation. Kaimenyi et al. (2013:94) note that affirmative action facilitates diversity and promotes mutual well-being for the general good by expanding opportunities for historically marginalised people and reduces the likelihood of tension when society's participants are on the same political, economic, and social standing.
Affirmative action policies are important vehicles for socio-economic transformation and may be instituted as incentive-based initiatives or directive regulation enforceable by law. The former is a policy that is designed to offer business the chance to play a voluntary role in the redress of imbalances by offering incentives to encourage their active participation. A directive on the other hand, is an instruction given by the government on how businesses should conduct themselves with regards to operationalisation of the socio-economic transformational agenda.
Governments around the world have used these programmes to uplift or empower previously disadvantaged citizens. Dietrich (2013:2) states that the policies are based on the premise that temporary government interventions are required to address a targeted group's social, economic, cultural, or governmental conditions in order for citizens of that group to gain successful equality with each other in that society.
A prominent affirmative action instrument amongst developing countries is an economic empowerment policy as these countries grapple with addressing inequality and poverty. Many of these countries are former colonies and were victims of discrimination and marginalisation of the indigenous populace at the expense of usually a minority group of settlers. These developing countries have designed and adopted economic empowerment policies with varying degrees of success. These policies include Economic Empowerment Reforms in Malaysia; ‘Zairianization’ in Zaire (Democratic Republic of Congo); ‘Ivorisation’ in Cote d’Ivoire; Broad-Based Black Economic
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Empowerment in South Africa; Citizen Economic Empowerment in Botswana; Indigenisation in Nigeria; and Economic Empowerment in Tanzania. Other countries that have enacted policies to redress economic inequalities brought about by colonialisation; include Angola, Namibia, Mali and Niger.
This was supported by interviewees who stated that:
“We have China for example. When they closed their economy, they were trying to redress the injustices that had been caused in the past. Only after they had regained control, did they start opening up their economy. And even if you look at the opening up of the economy; it was sector based and it was progressive. They just didn’t open up at one go. They started opening up in strategic areas; where they needed investment. What we learnt is that they headhunt the type of investors that they want and they are still protective of a number of sectors in their economy which they reserve for their locals. Singapore and Malaysia; we actually had people who went to understudy their models. In fact, almost every African country has some sort of indigenisation, but the implementation is different and specific to each country” (Government Official 1).
“You have countries like South Africa; they call it Black Economic Empowerment. Zambia.
You’ve got China. It is a deliberate effort to empower your own people and although it may be named differently but the logic is the same” (Government Official 2).
Thouvenot (2013:2) observes that “indigenisation and economic empowerment appears to be a trend in Southern and Eastern parts of Africa and although several colonial influences exist in these regions, the Anglo-Saxon and Portuguese heritage remains a common feature, as does the fact that colonialism lasted far longer in this region than elsewhere on the continent. As a result, these states faced severe and potentially destabilising disparities of wealth and resources between rich and poor at the attainment of their independence from colonial rule which, because of the economic policies of colonialism, was based on the colour line”. It is therefore not unusual that these countries have embarked on such policies to alleviate the socio-economic burden created and maintained during colonial rule.
Indigenisation and economic empowerment are therefore seen as affirmative action policies designed to assist countries in achieving socio-economic parity and shall be explored below. These policies provide a comprehensive and expansive approach that includes schooling, workplace affirmative action, land redistribution, and equity ownership; depending on the particular context (Uppal, 2014:4).
3.2.1.1 Indigenisation
Kwame Nkrumah, the late Ghanaian president, once asserted that despite the decolonisation of Africa, the former colonial power still wanted to keep Africa economically and politically subservient.
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A fear of foreign economic domination has spread across the continent and this has prompted countries to instigate measures to cartel “neo-colonialism”. Some of the measures aimed at this economic liberation include policies such as indigenisation.
Indigenisation is a deliberate interventionist approach that seeks to address the socio-economic discrepancies or imbalances created by historical social ills such as racism and colonisation. The intervention of policy makers in this regard, is aimed at correcting these imbalances and ensuring that the victims are empowered in various ways so as to encourage them to proactively contribute in and participate towards the country's economic development. It is a policy that is intended to boost the involvement of locals in economic activities such as the owners of the factors of production.
Uppal (2014:6) dictates that “indigenisation can be seen as a pragmatic approach to dealing with the injustices of the past, starting to resolve contradictions in a system whereby there was a fundamental mismatch between the democratic rights enjoyed by the majority, and yet a lack of economic opportunities”. Indigenisation policy, according to Malan (1976:58), involves the government compelling foreign-owned organisations to sell a portion of their business to locals in order to neutralise ownership, authority, and increase employment. As Balabkins (1980: 21) described it;
indigenisation is the ‘deforeignisation’ of a country’s economy.
3.2.1.2 Economic empowerment
Economic empowerment, as articulated by Thouvenot (2013:1), is the process of returning economic control to parts of a society that had historically been excluded from decision-making due to social inequality based on ethnicity, gender, religion, or culture. An act of positive discrimination, this process looks to ensure parity within an economy by enacting measures that help to prepare previously disenfranchised groups to become meaningful contributors and beneficiaries of wealth and prosperity.
These are policies that are made in order to increase economic involvement and allocation of resources to individuals or groups that may have been disenfranchised by events or societal norms.
This often includes women, the youth, marginalised ethnic groups and people living with a disability.
To a large extent, these are all enshrined in the recently adopted SDGs, (SDG 10 and 5) which, in summary, aims to empower and encourage all citizen's social, economic, and political inclusion, regardless of their age, gender, religious faith, race, ethnicity, disability, heritage, or economic or other status. In this respect, most countries have committed to taking active steps to ensure that laws are enacted to eradicate discrimination and to support change that provides economic opportunities for those affected.
Policies are ambitiously crafted by governments to redress socio-economic disparities and yet simultaneously grow the economy. In South Africa, for example, economic empowerment is used to redress socio-economic inequalities by offering opportunities for Black people to be actively and
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equitably involved in the running of the economy (Visser, 2005:32). The government of Botswana in its Citizen’s Economic Empowerment Policy (2012:3), defines such policies “as a set of interventions aimed at strengthening the ability of the indigenous or citizens of a country to own, manage and control resources, and the flexibility to exercise options, which will enable the native of a country to generate income and wealth through a sustainable, resilient and diversified economy”.
For the purpose of this research, indigenisation and economic empowerment policy is thus defined as a deliberate affirmative action initiative designed to provide indigenous citizens the opportunity to effectively participate in the economic activities and development of their country. This definition demonstrates the importance of initiating a transformative and restorative agenda to economically emancipate citizens from past discrimination. Governments need to assume an egocentric, unapologetic but pragmatic stance by implementing policies that will ensure prosperity for citizens, notably those previously marginalised. Such policies are essential tools for eradicating poverty, realising equality and sustainable development. When economic parity is achieved, social inclusion and quality of life increases, thereby improving societal stability and continued economic growth.
To understand some of the affirmative action policies that have been enacted by some countries around the world, it is necessary to review some of the theoretical considerations that precipitate the pursuit of societal equality. The selected theories of affirmative action and social justice help enrich our understanding of inequality and social change in light of historical and present injustice. This helps the researcher to analyse the policies from a critical point of view and to establish an appreciation of the means taken to empower the previously marginalised as well as to comprehend investor responses.